Governor-elect Matt Bevin has plans to scale back Kentucky’s Medicaid expansion, under which more than 400,000 residents have gained coverage.
And while he’s been mum on details so far, one thing is certain: He will have to seek federal approval to change the program.
That process could take awhile.
Bevin has said he intends to apply for a Section 1115 Medicaid waiver from the Centers for Medicare and Medicaid Services. The waivers give states more flexibility in how they operate their Medicaid programs. And they provide states with an avenue to test new approaches in Medicaid that differ from federal program rules, according to a brief by Kaiser Family Foundation.
Waivers have long been part of the Medicaid program, and states make changes to their individual programs all the time, said Robin Rudowitz, associate director of Kaiser’s Commission on Medicaid and the Uninsured.
“Many changes states can make without a waiver,” she said. “There’s a lot of flexibility within the current law. They move from fee-for-service to managed care. They change the delivery system, they add benefits.”
But when a state wants to pursue something beyond the law, it has to ask the federal government’s permission. And for a state to do that, it must create a proposal that includes justification for the changes and public input, Rudowitz said.
“There is typically a lot of negotiation back and forth between the administration and states on what parameters they will approve,” she said. “If it’s approved, or whatever pieces are approved, will ultimately be part of a waiver approval document with very explicit, spelled-out standard terms and conditions.”
The proposal also must be budget-neutral for the federal government.
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Rudowitz said the time it takes to complete the process varies. But she said Kentucky could be in for a long wait, depending on what changes Bevin chooses to pursue.
“If a state is making a change that’s in line with what they can do under state law or under federal law, then they can make that change pretty seamlessly if it doesn’t need legislative approval,” she said.
Democratic Gov. Steve Beshear implemented Kynect — the exchange and the Medicaid expansion under the Affordable Care Act — through executive order. It’s possible that Republican Bevin could dismantle the law just the same.
But state Senate President Robert Stivers, also a Republican, said he hopes lawmakers won’t be left out of the decision this time.
“They did it without any legislation [when it was implemented],” he said. “They did not come to the legislature to do this. So they felt that they had the authority three years ago with Gov. Beshear. Therefore, Governor-elect Bevin has the authority now.”
Stivers said changes to Kentucky’s health insurance exchange and Medicaid expansion program are necessary from a financial standpoint. By 2020, state government will spend an estimated $409 million a year to cover the required 10 percent cost of the expansion.
“What we want to do is create a different system that is not as costly, a system that has some personal responsibility,” Stivers said.
Kentucky could end up borrowing a page from a neighbor to the north.
Indiana received a federal waiver for its Medicaid expansion program, HIP 2.0, earlier this year. The program is predicated on that state’s existing Healthy Indiana Plan, which was already operating under a federal waiver.
Rudowitz said Indiana’s program is the most complex out of all the states that have been approved for an federal Medicaid waiver.
Under HIP, coverage was expanded to Indiana parents and childless adults earning below 100 percent of the federal poverty level. Enrollment for parents was not capped, but enrollment for childless adults has a cap and is limited to open enrollment periods.
The amended waiver under the Affordable Care Act led to HIP 2.0 and covers nearly all adults ages 19-64 with income from zero to 138 percent of the federal poverty level — the same range as prescribed by the ACA. An estimated 350,000 individuals became eligible for coverage under this plan.
But unlike Kentucky’s Medicaid expansion, most Hoosiers have to pay for their Medicaid coverage.
“Indiana does require a contribution for most of the newly eligible people in their program,” Rudowitz said. “There’s some different consequences for individuals below and above poverty.”
According to the Indiana Family and Social Services Administration, participants are required to pay premiums, which go into a “Personal Wellness and Responsibility” account that acts like a health savings account. Participants are rewarded for using preventive care services.
There are also consequences for not paying premiums, such as mandatory co-pays for services and loss of coverage. HIP 2.0 includes a co-pay for emergency room use, designed to discourage routine use of the emergency room, which is a driver of higher health care costs.
The plan also offers low-income Hoosiers an option to obtain assistance in purchasing private insurance through their employers, called HIP Link.
Rudowitz said there isn’t specific data on Indiana’s program yet, but there is a large body of research examining the effect of premiums and cost-sharing on low-income populations.
“There is a lot of evidence that imposing out-of-pocket requirements for a low-income population does have implications for both participation and access to care,” she said.
Stivers said Kentucky’s health care system has to be one that everybody takes part in and takes responsibility for.
“I want to see a good health care model that is the right model, that requires people to do for themselves, and when they can’t the government can help them,” he said.